Dutch digital bank, Bunq, is eagerly anticipating the acquisition of a banking license from U.K. financial regulators by the end of this year or the beginning of next year. CEO and founder, Ali Niknam, expressed his hopes during an interview at the Viva Tech conference in Paris. Niknam acknowledged the potential challenges that may arise due to the differences in regulatory processes between the U.K. and Europe. Despite this, he remains optimistic about the success of Bunq’s endeavors.
Bunq, recognized for its distinctive rainbow-colored cards and its focus on “digital nomads,” initially entered the U.K. market in 2019. However, the bank was compelled to withdraw from the country in late 2020 as a consequence of Brexit. With the U.K.’s formal exit from the European Union, EU-based financial entities, including Bunq, could no longer operate in the U.K. market solely based on their original country authorizations. Presently, Bunq holds a banking license solely with the Dutch central bank and is now strategizing its return to the U.K. market.
Challenges and Opportunities
The process of reentry into the U.K. market involves submitting an application to the Financial Conduct Authority for an electronic money institution license. This strategic move is aimed at capitalizing on a substantial market segment of approximately 2.8 million British digital nomads who are currently underserved. However, the road ahead is fraught with challenges, as evidenced by the struggles faced by European fintech rival, Revolut, in acquiring a U.K. banking license. The distinction between a banking license and an e-money license is significant, with the former granting firms the authority to offer loans, a feature that sets apart banks like Monzo and Starling within the U.K. consumer fintech landscape.
Despite the obstacles, Bunq remains steadfast in its efforts to engage with U.K. regulators in order to secure a banking license. Niknam lauded the responsiveness of the U.K. regulator and expressed optimism about the ongoing dialogue. Established in Amsterdam in 2012 by Ali Niknam, Bunq has emerged as one of Europe’s leading neobanks, boasting a user base of 12.5 million across the continent and deposits amounting to 8 billion euros ($8.6 billion). The bank was last valued at 1.65 billion euros by private investors. In a significant milestone, Bunq reported its first year of profitability, generating a net profit of 53.1 million euros in 2023. Furthermore, Bunq is also eyeing expansion into the United States, with plans to secure a U.S. federal bank charter after filing an application earlier this year.
Bunq’s journey to secure a banking license in the U.K. represents both a challenging endeavor and a significant opportunity for growth and expansion. With a solid foundation in Europe and a track record of success, Bunq is well-positioned to navigate the complexities of the regulatory landscape and establish a strong presence in the U.K. market.